Debt servicing payments in Hungary doubled through Q3 last year, putting the country on course to surpass Italy for the highest level in the EU in 2023.

Interest payments surged to 2.5 trillion Forint ($7.1 billion) during the first nine months of 2023, twice as much as January to September 2022, according to the statistics office in Budapest on Wednesday.

In December, the country’s central bank predicted debt servicing costs rose to 4.3% of Hungary’s economic output for the full year in 2023, and could only make a slight decline to 4.2% in 2024, the worst in the European Union, Bloomberg reports.

Hungary was one of the first emerging-market sovereigns this year to sell Dollar-bonds to meet increasing financing requirements on Wednesday. Last year Hungary’s borrowing soared to cover missing European Union funds, which were suspended as a result of rule-of-law concerns under Prime Minister Viktor Orban’s rule.

As such, due to this suspension, in 2023 Hungary increased Forint issuance, paying a high premium on inflation-linked retail bonds, particularly as consumer price growth stood just below 18% on average last year, as per estimates from the central bank.

According to Economy Minister Marton Nagy on Wednesday, the larger interest payments will result in higher interest income for the people of Hungary, sparking a domestic consumption recovery following a recession last year.

Furthermore, this has increased Hungary’s financing needs. Indeed, the country was selling $2.5 billion in 12-year Dollar bonds on Wednesday, the Bloomberg report adds, at around 180 basis points over US Treasuries, according to a source with knowledge of the matter.

Hungary had set a target of selling as much as $2 billion in foreign-currency bonds in Q1 this year, as well as nearly €1 billion in green euro bonds.